What is Offshoring Management Capability and How Do Organizations Develop It? A Study of Dutch IT Service Providers

AbstractThis study develops a capability perspective of offshoring. While previous research shows that experience affects future offshoring decisions, we still lack an understanding of what offshoring management capability is and how organizations develop it. Using data on five Dutch IT service providers, we find that offshoring management capability is multidimensional as it comprises four dimensions: coordination competency, relationship development, relationship design, and organizational identification. Furthermore, we uncover the process through which organizations can actively develop an offshoring management capability. We find that there are four elements in this learning loop: an offshoring growth mentality, adaptive monitoring of offshoring performance, offshoring reflexivity, and mechanisms for storing and disseminating offshoring best practice. Therefore, our capability perspective of offshoring provides a comprehensive conceptualization of offshoring management capability as a multidimensional construct and uncovers the process through which organizations develop it.